Title: Politics and the UK's monetary policy.
Authors: Chang, Fang‐Shuo; Chen, Shiu‐Sheng; Wang, Po‐Yuan
Abstract: This paper examines whether politics causes regime shifts in deviations from the optimal monetary policy in the United Kingdom. After using a dynamic stochastic general equilibrium model to construct the welfare‐maximizing policy rule and deviations from the optimal Taylor rule, we show that politics does indeed play an important role in explaining these deviations. In addition to politics, unemployment rates account for regime shifts in the Taylor rule deviations.
Subjects: MONETARY policy; STOCHASTIC analysis; EQUILIBRIUM; EMPLOYMENT statistics; POLICY sciences
Publication: Scottish Journal of Political Economy, 2020, Vol 67, Issue 5, p486
ISSN: 0036-9292
Publication type: Academic Journal
DOI: 10.1111/sjpe.12256

Politics and the UK's monetary policy.

Chang, Fang‐Shuo; Chen, Shiu‐Sheng; Wang, Po‐Yuan